January 16, 2008 Moderated by Mary Jo Muoio, NCBFAA President Peter H. Powell, Sr., NCBFAA Senior Counselor Alan R. Klestadt, NCBFAA Customs Counsel Importer Security Filing: The “10 + 2” Rule

2 Importer Security Filing (“ISF”) What is it? The electronic transmission of certain data elements for cargo shipped to or through the United States by ocean vessel. Generally, the required information must be transmitted to CBP via either AMS or ABI at least 24 hours before the cargo is laden on board an ocean carrier. The importer or his authorized agent is responsible to transmit 10 data elements and the carrier must transmit 2 additional elements. Thus, the security filing is referred to as the “10+2 Rule.”

3 24 Hour Rule is Still in Effect The Importer Security Filing (ISF) is designed to improve CBP’s ability to target high-risk cargo before it arrives in the United States by making additional information available to CBP earlier in the delivery process. The ISF is an additional filing and does not replace the 24 hour rule transmission.

4 ISF Data Elements 11. Vessel Stow Plan 12. Container Status Messages 1. Manufacturer (or supplier) name & address 2. Seller name & address 3. Buyer name & address 4. Ship to name & address 5. Container stuffing location 6. Consolidator name & address 7. Importer of record number 8. Consignee number 9. Country of origin of goods 10. HTS number (6 digit) Not specifically listed as a separate data element, but also required, is the bill of lading at the lowest level (i.e., house bill of lading).

5 ISF Data Elements Vary for Different Types of Shipments Shipments intended to be entered into the U.S. or an FTZ : - require all 10+2 data elements for each good listed at the 6 digit HTSUS number at the lowest bill of lading level (i.e., the house bill of lading). - require that the manufacturer (or supplier) name and address, country of origin, and HTSUS number must be linked to one another at the line item level.

6 ISF Required for Shipments Transiting the U.S. For shipments consisting of foreign cargo remaining on board (FROB) and shipments intended to be transported in-bond under either IE or T&E procedures, the ISF data elements are: 1. Booking party name & address 2. Foreign port of lading 3. Place of delivery 4. Ship to name & address 5. HTSUS number (6 digit)

7 ISF Data Elements for Bulk and Break Bulk Cargo Bulk cargo which is exempt from the 24 hour rule filing is also exempt from the ISF. Importers of break bulk cargo that are exempt from the 24 hour rule filing must arrange to transmit the ISF data elements to CBP 24 hours prior to the cargo’s arrival in the U.S.

8 Who Can Transmit the ISF? The “importer” or his “authorized agent” must submit the ISF via either the AMS or ABI systems (other electronic systems, i.e., ACE, may be approved in the future). “Importer” is defined as ”the party causing goods to arrive within the limits of the United States.” For cargo remaining on board the vessel (FROB), the importer is the carrier. For merchandise subject to an IE or T&E in bond shipment, or goods to be delivered to an FTZ, the party filing the IE, T&E or FTZ entry is construed as the importer.

9 Authorized Agents To be an “authorized agent” for ISF purposes, a party must be an approved filer under ABI or AMS. They must also possess a basic import bond, an international carrier bond or a foreign trade zone operator bond, depending upon the character of the filing. Authorized agents must retain powers of attorney and make them available to CBP upon request. (Under the 24 hour rule, AMS filers are not required to obtain powers of attorney.)

10 Vessel Stow Plan In addition to any other advance filing requirements, the incoming carrier must transmit: 1. Vessel name (including IMO number) 2. Vessel operator 3. Voyage number 4. Container information including: 1. container operator 2. equipment number 3. equipment size and type 4. stow position 5. Hazmat-UN code 6. port of lading 7. port of discharge This information must be transmitted for each container and unit of break bulk cargo carried on each vessel.

11 Vessel Stow Plan Must be received by CBP via AMS no later than 48 hours after the vessel departs from the last foreign port. For voyages less than 48 hours in duration, CBP must receive the vessel stow plan prior to arrival at the first U.S. port.

12 Container Status Messages (“CSM”) The incoming carrier must submit messages regarding the status of certain specified events if the carrier creates or otherwise collects a CSM in its equipment tracking system. There is no requirement for a carrier to create or collect a CSM which it does not otherwise create or collect on its own. Must be transmitted to CBP no later than 24 hours after the CSM was entered into the carrier’s equipment tracking system.

13 Reportable CSM Events A CSM must be reported when a container which is destined to arrive within the limits of a U.S. port undergoes the following: 1. Booking confirmation 2. Terminal gate Inspection 3. Arrives or departs from a facility (gate-in or gate-out) 4. Loaded or unloaded from a vessel 5. Vessel departure and/or arrival at a port 6. Intra-terminal movement 7. Ordered stuffed or stripped 8. Confirmed stuffed or stripped 9. Shopped for heavy repair A carrier may transmit other CSM’s in addition to those set forth above.

14 CSM Report Each CSM must include: 1. Event code being reported (as defined in ANSI X.12 or UN EDIFACT) 2. Container number 3. Date and time of the event 4. Status of the container (full or empty) 5. Location where the event took place 6. Vessel identification associated with the message.

15 Verification of Information NPRM provides that the “presenting party” may electronically transmit the information on the basis of what that party reasonably believes to be true under the circumstances. (This is consistent with existing regulation under 19 CFR 4.7(b)3(iii).) If the information changes or more accurate information becomes available before arrival, the presenting party must update the transmission. If, after an ISF is submitted, the goods are no longer intended to be imported into the U.S., the presenting party must withdraw the ISF and transmit to CBP the reason for withdrawal.

16 ISF Confirmation Presenting party will receive electronic acknowledgement that the ISF has been received under ABI and AMS standards. ABI and AMS filers will not have the ability to query whether the ISF filing is complete, identify who filed the ISF, or confirm the accuracy of the ISF data elements. In the commentary to the NPRM, CBP has indicated that it is putting the onus on the importers and their designated agents to effectively communicate with regard to the completeness and contents of an ISF.

17 Participation in ABI to be Expanded Proposed amendment to 19 CFR to permit any “authorized agent” to participate in ABI solely for the purposes of filing the ISF. With approval from CBP, any party may participate in ABI for other purposes including the transmission of protests, filing forms related to in-bond movements (Form 7512) and applications for FTZ admission (Form 214). Only “importers of record” or licensed customs brokers may transmit data under ABI for entry/entry summary purposes.

18 The ISF and Entry Can be Made in a Single Transmission The Importer may elect to have the entry/entry summary and the ISF presented via a single electronic transmission. Only licensed customs brokers and importer self- filers may make such transmissions. FTZ entry (Form 214) and ISF can also be filed in a single transmission.

19 New Bond Requirements Basic Importation & Entry Bond terms are amended to: 1.Require compliance with new ISF regulations and provides that the principal is liable for liquidated damages equal to the value of the merchandise in the case of default; and 2.Provide for liquidated damages equal to $5,000 per violation if the principal elects to provide advance cargo information and defaults on those obligations.

20 New Bond Requirements International Carrier Bond terms are amended as follows: 1.If the incoming carrier agrees to provide advance cargo information and defaults on those obligations, the carrier (as the principal) is liable for liquidated damages of $5,000 per violation to a maximum of $100,000 per conveyance arrival. 2.If the principal elects to provide ISF data to CBP and defaults on any obligation, the principal shall be liable for liquidated damages equal to the value of the merchandise involved in the default. 3.If the principal causes a vessel to arrive within the port limits of the U.S. and defaults on the obligation to submit a vessel stow plan, the principal shall be liable for liquidated damages equal to $50,000 for each vessel arrival. 4.If the principal causes a vessel to arrive within the port limits of the U.S. and defaults on the obligation to submit CSM’s, the principal shall be liable for liquidated damages of $5,000 per violation to a maximum of $100,000 per conveyance arrival.

21 New Bond Requirements Foreign Trade Zone Operator Bond terms are amended to require compliance with the ISF requirements and provide that the principal shall be liable for liquidated damages equal to the value of the merchandise in the event of a default.

22 Open Issues CBP states that the transmission of the ISF by itself does not constitute ‘customs business.’ However, in several areas the NPRM provides for the transmission of a 10 digit HTSUS number and the act of classifying the merchandise is customs business. This language must be clarified. CBP will publish technical information regarding the transmission of entry and ISF data.

23 Comments on NPRM NCBFAA’s comments to the initial “Straw Man” proposal were largely incorporated into the NPRM. NCBFAA is soliciting member feedback for inclusion in the Association’s response. Comments on the proposed regulations are due by March 3, _1